Introduction

Background

Strawberry Breeding Program Key Terminology

Cultivar: A variety of plant that has been created or selected intentionally and maintained through cultivation. Specific to the Strawberry Breeding Program (strawberry program), this term is reserved for a genotype that undergoes the process for commercialization and patenting.

Genotype: The genetic makeup, as distinguished from the physical appearance, of an organism. In the case of strawberries, the genotype refers to the genetic makeup of a plant that is fixed after crossbreeding.

Germplasm: Any living plant tissue (such as a stem, leaf, pollen, or a few cells) that is built upon, improved on, and modified over many years to create new strawberry varieties.

Licensed Nursery: A nursery that is licensed by the University of California (university) to propagate and sell strawberry cultivars to growers in the United States, Canada, or worldwide.

Master Licensee: An international company licensed by the university and granted the exclusive right to sub-license nurseries the right to propagate and sell cultivars in specific countries.

Sources: The American Heritage Science Dictionary, interviews with university staff, University of California, Davis’ (UC Davis)website, California Strawberry Commission v. The Regents of the University of California litigation, and UC Davis Internal Audit Services’ report on the strawberry program.

The University of California, Davis (UC Davis) is one of 10 campuses within the University of California (university) system. According to its website, UC Davis’ mandate as a land-grant college is to provide quality higher education and address the needs of society, in part, through the education of plant breeders and the development and release of improved plants necessary for continued agricultural productivity. Accordingly, the university has been breeding strawberries since the 1930s through its Strawberry Breeding Program (strawberry program) and the program has been located at UC Davis since 1952. The strawberry program’s goal is to develop new, commercially viable varieties of strawberry plants that are of higher product quality, are less vulnerable to pests and disease, and can be grown more efficiently. As a result of this program, the university currently holds U.S. patents on more than 30 strawberry varieties, also known as cultivars. UC Davis, on the university's behalf, licenses the right to reproduce and sell these cultivars in California and worldwide. Until recently, UC Davis employed two plant breeders who created several strawberry varieties using a collection of germplasm, strawberry plant materials developed by the strawberry program. The two breeders retired from UC Davis in November 2014 to carry on their work privately. UC Davis subsequently hired a new strawberry breeder in February 2015 to continue the strawberry program’s research. The text box provides definitions of key terms used in this report.

The California Strawberry Commission (commission) is a state government agency that represents an industry of 600 strawberry growers, shippers, and processors. The commission’s focus is on food safety education as well as production and nutrition research, trade relations, public policy, and marketing communications. Since 1991 the commission provided the strawberry program with funding totaling over $8.2 million through annual research agreements with the university, under the direction of UC Davis’ two former strawberry breeders. The former breeders withdrew their consent to the agreement in August 2012 and UC Davis subsequently notified the commission in November 2012 that it would not be renewing the commission’s research agreement.

In late 2013 the commission filed a lawsuit against the university alleging, among other things, that the university had breached the research agreement. The commission also claimed that it had rights to the strawberry germplasm. Neither of the former breeders was a party to the litigation. The university later filed a cross-complaint asking the court to declare that it, and not the commission, held the intellectual and tangible property rights to the germplasm. In February 2015 the parties settled their lawsuits and entered into a written settlement agreement to resolve the litigation without trial. The parties agreed that the commission has no claims to the strawberry germplasm and that the university is the owner. The settlement agreement also created a new strawberry advisory committee to provide input on the strawberry program, which will continue at UC Davis for at least the next five years. The advisory committee will consist of nine appointed members equally representing UC Davis, the commission, and other stakeholders.

Oversight of the Strawberry Program

The strawberry program is subject to systemwide university policies and UC Davis’ campus policies, which generally reflect the university’s policies. As shown in Figure 1, several entities oversee the strawberry program’s financial operations that relate to patenting, licensing, distribution of patent income, management of research agreements, and day‑to‑day operations. Although the strawberry program’s former breeders were primarily responsible for the financial health and management of the strawberry program, various entities within the university oversee the strawberry program. The strawberry program is housed in the UC Davis Department of Plant Sciences (department) within the College of Agricultural and Environmental Sciences (agricultural college). In addition, UC Davis’ Innovation Access unit is responsible for negotiating licensing agreements and royalty rates with the licensed nurseries and master licensees. In the past, the commission provided some level of oversight over the funding provided through research agreements. For example, the commission was responsible for approving the invoices that the strawberry program submitted for reimbursement under the commission’s former research agreement. However, it is not clear as of this writing whether the university and the commission will enter into any future agreements.

Figure 1

Roles and Responsibilities of the Various Entities Involved in the Strawberry Breeding Program

Sources: University and UC Davis websites, various documents obtained from the university, and interviews with university staff.

The University’s Plant Patent Process

The term intellectual property describes products of the mind, such as inventions and other creations. There are four primary types of intellectual property: copyrights, trademarks, patents, and trade secrets. As a type of personal property, intellectual property is protected by law.

Newly developed university strawberry cultivars are protected from unauthorized use in the United States under plant patents granted by the federal Patent and Trademark Office. A plant patent may be granted to anyone who invents a distinct and new variety of plant and reproduces it asexually—by a means other than from a seed. A plant patent lasts for 20 years from the date on which the owner files an application. When it expires, the plant becomes available to the public for free use.

Although the breeders invented the strawberry cultivars, university policy requires all university employees to transfer all rights to potentially patentable inventions to the university in accordance with their employment agreements. Under this policy, the university owns the plant patents. Thus, it has the legal right to preclude others from selling or using the patented plant, or reproducing it asexually. However, U.S. plant patents only provide protection within the United States. Some intellectual property protections are available outside the United States and the university uses these to protect the strawberry cultivars internationally.

Before the university patents a cultivar, the cultivar must first go through the university’s review process, as shown in Figure 2. Specifically, the breeder recommends the cultivar to the Plant Variety Release Committee (release committee) as potentially patentable by filing a record of invention, which provides the university with a detailed description of the new variety, among other pieces of information. The release committee assesses whether the cultivar is ready for commercial release—that is, if it will add value to the market—and makes its recommendation for release to the chair of the department and then to the dean of the agricultural college, who makes the final decision as to whether to release the new cultivar. If the dean agrees to release the cultivar, then the Innovation Access unit files an application for a U.S. plant patent and the university may enter into licensing agreements with licensed nurseries and master licensees.

Figure 2

The Strawberry Breeding Program’s Patent Process

Sources: University patent policy, documents obtained from UC Davis, interviews with key UC Davis staff, and information from the United States Patent and Trademark Office website.

The Strawberry Program’s Funding Sources

The strawberry program receives funding from various sources, including the university’s allocation of patent income and the discretionary internal allocations of the agricultural college and the department, which draw their funding from state general funds, donor gifts, workshop income, and education and research funds. UC Davis enters into licensing agreements, on behalf of the university, with licensed nurseries, granting them the right to grow the strawberry plants of university-patented varieties and the right to sell those plants to fruit growers. Master licensees sublicense those rights to nurseries internationally, in the regions their licensing agreements specify. Patent income consists of the fees that both types of licensees pay when issuing their agreements and the royalties that they owe for each batch of 1,000 plants sold to strawberry growers. These royalties are assessed at varying rates depending on whether the strawberries are sold inside California, elsewhere in the United States or in Canada, or internationally. Although licensed nurseries can sell to international growers, the majority of international sales are conducted by the sublicensed nurseries of master licensees. In the case of these international sales, UC Davis interacts only with the master licensee, which collects royalties from the nurseries that it sublicenses.

The university’s Office of the President’s Innovation Alliances and Services (Alliances and Services) is responsible for invoicing licensees, collecting royalties, producing relevant financial reports, and distributing patent income to the breeders and UC Davis. Semiannually, Alliances and Services sends the licensees blank reports with their respective royalty rates, which are dictated by UC Davis’ Innovation Access unit. The licensees self-report by entering their latest sales figures in the reports and using the provided royalty rates to calculate payments due to the university. Alliances and Services collects these payments and then annually distributes a portion of the payments back to the campus, as part of its distribution of net patent income. UC Davis then follows its own process for allocating a portion of the patent income to the strawberry program. From fiscal years 2010–11 through 2012–13, the strawberry program generated roughly $21.6 million in total patent income for the university, which accounted for roughly 89 percent of the patent income that UC Davis earned from all of its plant patents during that period.

Under the university’s former research agreement with the commission, the commission agreed to reimburse the university for up to $350,000 annually for research-related expenses of the strawberry program. The performance period for this annual research agreement was from February through January of the following year. During this period, UC Davis sent the commission invoices summarizing the strawberry program’s expenses. The commission reimbursed UC Davis for these expenses in exchange for the timely transfer of research findings to the strawberry industry and a discounted royalty rate of $2 per 1,000 plants sold in California by licensed nurseries. After the commission paid its last contribution in April 2013, the university eliminated its associated discount in September 2013. According to the strawberry program’s new breeder, the university and the commission have not yet decided if they will enter into another research agreement in the future.

UC Davis established a similar discount, now also discontinued, using a different research agreement, which it referred to as the Non‑California Discount Revenue Program (discount program). In exchange for a discounted royalty rate of $1.50 to $2.40 per 1,000 plants sold outside of California, the licensed nurseries and master licensees agreed to provide research funding directly to the strawberry program at the rate of $1 per 1,000 plants sold. To facilitate this, UC Davis, on behalf of the university, entered into separate research agreements with the licensed nurseries and master licensees that sold the university’s patented strawberry varieties. Licensed nurseries, which sold mostly to growers in the United States and Canada, paid their research contributions based on sales from July to June of the previous year, while master licensees paid their contributions based on sales from January to December of an earlier calendar year. The discount program provided the strawberry program with roughly $600,000 in contributions annually. After the strawberry program received its last contribution for this discount program in December 2012, UC Davis eliminated its associated discount in September 2013. UC Davis has not determined whether it will establish a similar discount program in the future. Table A in the Appendix shows the amount of funding that the strawberry program received from the various sources described in this section in fiscal years 2011–12 and 2012–13.

Conflict-of-Interest Policies and Laws

The university has several policies related to conflicts of interest. For example, the university has policies that specifically address the various aspects of conflicts of interest in research. In addition to university policies, university employees are subject to various laws relating to conflicts of interest.

The central conflict-of-interest law governing state officers and employees in California is the Political Reform Act of 1974 (act). The act contains two separate but related obligations generally applicable to university employees and their personal financial interests. First, it requires designated university employees to disclose certain financial interests by filing a statement of economic interests. Second, it generally prohibits university employees from making, or participating in making, decisions in which they have a financial conflict of interest. An employee who has a conflict of interest must disqualify himself or herself from making, influencing, or participating in such a decision. To ensure that the disclosure requirements of the act are accomplished, the university must maintain a list of specified positions that, if held, require the designated employee to file statements disclosing certain financial interests. However, UC Davis did not consider the former breeders’ work to trigger any filing requirements; therefore, the former breeders would not have had reason to believe they were required to disclose their financial interests.

Under the act, certain decisions made by individuals who have teaching or research responsibilities at an institution of higher education are exempt from both the disclosure and disqualification requirements. However, that exemption does not apply if the research project in question is funded or supported, in whole or part, with funds earmarked by a donor for a specific project or specific researcher from a nongovernmental entity. A university researcher who has such a financial interest is not necessarily prohibited from participating in making a decision to undertake the research even where a financial conflict of interest may be present, as long as an independent university committee substantively reviews the decision. Nevertheless, failing to timely disclose and report the financial interest is a violation of the act and can lead to fines.

Under the licensing agreements, nurseries and master licensees could participate in the former discount program if they made annual contributions to the strawberry program. Under separate and related agreements, those nurseries and master licensees became sponsors of strawberry cultivar research. Thus, the strawberry program received funding earmarked for its specific purposes from private, nongovernmental entities. Although UC Davis deemed these funds royalties and therefore concluded that the breeders were not required to disclose their financial interests, we disagree. We believe that because the strawberry program was receiving nongovernmental funding in the form of contributions made by licensees, the act required the researchers with principal responsibility for the strawberry program to file statements of economic interests, which would have enabled UC Davis and the public to assess whether the breeders were involved in making any decisions about the strawberry program that constituted a conflict of interest.

Scope and Methodology

The Joint Legislative Audit Committee (audit committee) directed the California State Auditor to review the strawberry program. We list the objectives that the audit committee approved and the methods we used to address them in Table 1 below.

Table 1
Audit Objectives and the Methods Used to Address Them

Audit Objective

Method

1. Review and evaluate the laws, regulations, contract provisions, and policies and procedures significant to the audit objectives.

2. Determine which entities are involved in overseeing the strawberry program’s financial operations and perform the following:

Identify the roles and responsibilities of each oversight entity including, but not limited to the University of California Regents, UC Davis’ College of Agricultural and Environmental Sciences (agricultural college), and the agricultural college’s strawberry program.

Determine how UC Davis and the agricultural college monitor the strawberry program’s financial operations to ensure that it complies with relevant laws, rules, and regulations.

To the extent possible, determine how many audits of the strawberry program have been conducted since 1955. For a selection of audits completed in the past five years, assess the following:

Whether each audit was reviewed and approved by an authorized person or entity.

Whether each audit examined funding sources and uses and funds expended for nonbreeding program purposes.

Whether each audit examined payments to strawberry breeders and other UC Davis personnel.

Interviewed key staff and reviewed University of California (university) policies and procedures to obtain an understanding of each entity’s oversight role and processes.

The strawberry program's licensing and research agreements were established between the university and its licensees and sponsors. However, UC Davis is responsible for establishing the royalty rates and negotiating and managing the agreements. Therefore, we refer to UC Davis instead of the university when applicable throughout this report.

Interviewed key staff and reviewed university documents to understand how UC Davis and the agricultural college monitor the strawberry program’s financial operations to ensure compliance with relevant laws, regulations, and university policies and procedures.

Reviewed and tested the business practices of the Department of Plant Sciences (department) as part of our testing for audit objectives 3 and 4.

Interviewed key staff and reviewed university documents related to past reviews of the strawberry program. There have been no audits of the strawberry program from 1955 through 2013, other than a May 2012 audit of the department. However, that audit focused on those matters that UC Davis’ Internal Audit Services considered higher risks for the department and did not examine the strawberry program in detail.

In 2014 UC Davis’ Internal Audit Services was conducting a review of the strawberry program at the request of campus counsel in preparation of litigation. Because the audit report was incomplete, the audit team did not review the draft document during fieldwork. In April 2015 UC Davis notified us that its audit report was finished. The audit team then reviewed the final audit report for issues relevant to the scope of our audit. No significant issues were identified about which we were not already aware.

3. Review and assess the adequacy of financial policies and procedures the strawberry program followed for the most recent three‑year period. In addition, perform the following:

Determine whether the strawberry program’s policies and practices ensure that it collects all revenues and accurately records and reports them.

Determine how much the strawberry program budgeted for salary and travel expenditures for the most recent three‑year period and whether those expenditures were reasonable.

Determine whether the strawberry program has maximized its cost‑saving opportunities.

Interviewed key staff and reviewed university documents to understand the university’s process for collecting, recording, and reporting patent income for the strawberry program.

Reviewed the university’s patent policy and UC Davis’ policy on distributing patent income to obtain an understanding of the amount of strawberry patent income the university received in relation to the amount it distributed to the strawberry program.

Reviewed a selection of payments received from licensees and the California Strawberry Commission to ensure that the university collected and accurately recorded and reported these payments. In addition, we determined whether the university distributed these payments in accordance with university policy.

Reviewed the department’s general ledgers for fiscal years 2011–12 through 2012–13 and reconciled them with UC Davis’ April 2014 report to the Legislature regarding the strawberry program’s fiscal health.

Reviewed the strawberry program’s budgets for fiscal years 2011–12 through 2014–15.

Reviewed a selection of salary expenditures for fiscal years 2011–12 through 2013–14 to ensure that the university paid wages within the appropriate salary range. We did not note any exceptions.

Reviewed a judgmentally selected set of program travel expenses for fiscal years 2011–12 through 2013–14 to ensure that they were reasonable and appropriate. We did not note any exceptions.

Reviewed a judgmentally selected set of strawberry program supply and contracted labor expenses for fiscal years 2011–12 through 2013–14 to ensure they were reasonable and appropriate. As part of our selection process we reviewed department general ledgers for fiscal years 2011–12 through 2013–14 to identify any patterns of potential contract splitting and tested a selection of labor contracts to ensure that the university contracted in accordance with university policy. We did not note any exceptions.

Analyzed the strawberry program’s use of its travel booking system to determine if strawberry program staff were maximizing savings for travel. We determined that department staff did not use the university’s travel booking system because the university’s policy does not explicitly require them to do so. As a result, strawberry program staff may not be maximizing cost savings related to travel. However, as shown in Table A of the Appendix, the strawberry program’s travel expenses only accounted for $30,140, or 1.3 percent, of the strawberry program’s expenses in fiscal year 2012–13.

4. Determine whether expenditures of funds received from the California Strawberry Commission (commission) by UC Davis, the agricultural college, and the strawberry program are appropriate, and whether those entities are meeting all their responsibilities in the use of those funds.

Reviewed the university’s contracts with the commission to obtain an understanding of any restrictions on the commission’s reimbursement of strawberry program expenses.

Reviewed a judgmentally selected set of strawberry program expenses for fiscal years 2011–12 to 2012–13 that were reimbursed by the commission to ensure that the expenses were in compliance with the terms of the contract. We did not identify any instances in which the strawberry program used this funding inappropriately.

Reviewed documents obtained from the department to determine whether the strawberry program met its contractual responsibilities. We found evidence that the former breeders shared the results of their research with the commission and strawberry industry. We also confirmed that the commission approved the strawberry program’s expenditures that were invoiced during our audit period. We determined that the strawberry program met its responsibilities in the use of those funds.

5. Review and assess UC Davis’ intellectual property policies and procedures that apply to the strawberry program, including the following:

Determine whether the plants, or cultivars, the strawberry program develops are protected as intellectual property and what those protections are.

Determine who owns the plants, or cultivars, the strawberry program develops and what ownership rights the strawberry program staff may have to the plants, or cultivars, they develop.

Interviewed key staff to obtain the university’s perspective on who maintains ownership of the strawberry program’s germplasm.

Interviewed key staff to understand what safeguards UC Davis has in place to protect the strawberry program’s germplasm. We learned that UC Davis physically stores the complete germplasm collections within locked freezers at two undisclosed locations. Access to the germplasm is limited to only a few individuals, such as the strawberry program’s breeder and the university’s head of greenhouses.

Interviewed key staff and reviewed university documents to obtain an understanding of who owns the germplasm.

Determined that according to patent law and university policy, the university owns all patented strawberry cultivars, not the university employees. To further protect its interest, the university filed a provisional plant patent for the majority of the genotypes within the strawberry program’s germplasm. The patent is pending and the university plans to file a non-provisional patent application prior to June 4, 2015.

6. Determine whether the strawberry program is subject to a conflict-of-interest law or policy and whether conflicts have been identified and addressed.

Interviewed key staff and reviewed university policies to obtain an understanding of which strawberry program staff are required to fill out an annual conflict-of-interest form. Our review found that UC Davis did not believe that the former breeders were required to file a conflict-of-interest form and it did not require any other strawberry program staff to file a conflict-of-interest form.

Reviewed the job descriptions for the strawberry breeding program employees to analyze whether staff responsibilities and duties may create a conflict of interest.

Obtained a list of strawberry varieties submitted to the university for patent consideration. We assessed whether the frequency of submissions by the former breeders declined after they informally announced plans to retire and start a private company. During this time, our review showed that the former breeders continued to submit strawberry varieties for the university’s patent consideration. We did not note any exceptions related to the schedule of the former breeders’ submissions.

7. Review and assess any other issues that are significant to the policies and procedures of the strawberry program’s management and operations.

Interviewed key staff to understand when UC Davis last increased the royalty rates it charges for its patented strawberry varieties.

Reviewed UC Davis’ analysis of the strawberry royalty rates it charged and determined whether its assessment was consistent with the strawberry program’s goals.

Interviewed representatives from other universities with strawberry breeding programs to gain an understanding of their strawberry licensing royalty rates.

Assessment of Data Reliability

In performing this audit, we relied on various electronic data files extracted from the information systems listed in Table 2. The U.S. Government Accountability Office, whose standards we are statutorily required to follow, requires us to assess the sufficiency and appropriateness of computer-processed information that is used to support findings, conclusions, or recommendations. Table 2 describes the analyses we conducted using data from these information systems, our methodology for testing them, and the limitations we identified in the data. Although we recognize that these limitations may affect the precision of the numbers we present, there is sufficient evidence in total to support our audit findings, conclusions, and recommendations.

Table 2
Methods Used to Assess Data Reliability

Information System

Purpose

Method and Result

Conclusion

University of California, Davis (UC Davis)

Davis Financial Information System (DaFIS)

Legacy financial system that contains accounting data for the period July 2010 through June 2011

To determine whether a selection of the Strawberry Breeding Program’s (strawberry program)travel, supplies, and California Strawberry Commission-reimbursed expenditures were appropriate and reasonable based on university policy and to test internal controls to ensure that all revenue is being collected and allocated as required by contract.

We did not perform accuracy and completeness testing of these data for two reasons. First, during our audit period the strawberry program did not have a unique identifier, such as a program code, that could be used to isolate its expenditures and revenues from other programs within the University of California’s (university) computer systems. As a result, it is impossible to isolate all of the strawberry program’s expenses without manual verification or reliance upon a secondary database. Second, we were unable to compare totals calculated from the Department of Plant Sciences’ (department) general ledgers to an audited financial report to determine the completeness of the system because the only available audited financial report for the period under review is generated at the university systemwide level and does not contain department-specific information.

To gain some assurance of the completeness of transactions in the data, however, we agreed the payroll expenses recorded in KFS to reports generated from the Payroll and Personnel System (PPS).

Undetermined reliability for the purpose of this audit.

Although this determination may affect the precision of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.

UC Davis

Kuali Financial System (KFS)

Current financial system containing accounting data for the period July 2011 through April 2015

University of California, Office of the President (UCOP)

PPS

Payroll and human resources data as maintained by the university for the period July 2010 through June 2014

To determine whether breeder and staff salaries and benefits complied with relevant policies and were within acceptable ranges.

We did not perform accuracy and completeness testing of the PPS data because this is a paperless system and hard-copy source documentation was not available for review. Alternatively, following U.S. Government Accountability Office (GAO) guidelines, we could have reviewed the adequacy of selected system controls that include general and application controls. We did not perform a review of PPS controls because testing the number and variety of data systems used in this audit would have been cost-prohibitive.

To gain some assurance of the completeness of the data, however, we materially reconciled the salary and benefit expenses to those reported in the strawberry program’s funding accounts, which are recorded in KFS.

Undetermined reliability for the purpose of this audit.

Although this determination may affect the precision of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.

UC Davis

MyTravel System

Online travel and entertainment expense reporting system as maintained by UC Davis for the period July 2011 through June 2014

To determine whether travel expenditures complied with relevant policies and document what portion of travel expenses was booked through the university’s travel system.

We did not perform accuracy and completeness testing of the MyTravel System data because this is a paperless system and hard-copy source documentation was not available for review. Alternatively, following GAO guidelines, we could have reviewed the adequacy of selected system controls that include general and application controls. We did not perform a review of the MyTravel System controls because testing the number and variety of data systems used in this audit would have been cost-prohibitive.

To gain some assurance of the completeness of the data, however, we reconciled travel expenses against payments processed through DaFIS and KFS.

Undetermined reliability for the purpose of this audit.

Although this determination may affect the precision of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.

UCOP

Patent Tracking System (PTS)

Systemwide application for technology transfer activities such as invention disclosure, patent prosecution, and licensing and financial information for the period July 2009 through June 2014

To ensure that all revenue is being collected and to calculate the difference in discounted and nondiscounted royalty rates.

We did not perform accuracy and completeness testing of the PTS data because this system is located in Oakland and the level of resource investment necessary for such a review was not feasible within this audit’s budget. We did not perform a review of PTS controls because testing the number and variety of data systems used in this audit would have been cost-prohibitive.

To gain some assurance of the completeness of the data found in the PTS, however, we reviewed documentation demonstrating that UCOP reconciled the PTS report we used in our analysis to University of California, Los Angeles’ (UCLA) Financial System General Ledger Applications (FS).

Undetermined reliability for the purpose of this audit.

Although this determination may affect the precision of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.

UCLA

FS

Official financial book of record for the UCLA campus; UCOP; and University of California, Merced for the period July 2010 through June 2014

To ensure that all revenue is being collected and to calculate the difference in discounted and nondiscounted royalty rates.

We did not perform accuracy and completeness testing of the FS data because the system is located in Los Angeles and the level of resource investment necessary for such a review was not feasible within this audit’s budget.

To gain some assurance of the completeness of the data found in the FS general ledger report, however, we reviewed documentation demonstrating that UCOP reconciled the FS general ledger to UCOP’s PTS.

Undetermined reliability for the purpose of this audit.

Although this determination may affect the precision of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.

Source: California State Auditor’s analysis of various documents; data obtained from the university, UCLA, and UC Davis; and interviews with university officials.